#162 – Amazon’s new commission-free marketplace

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I've got a great edition for you this week that covers:

• Walmart's record setting year of online sales
• Shein's livestream launch of its Spring / Summer collections
• Google's deal with Reddit to steal all your content
• Amazon's new commission-free seller marketplace
• Wix going global with the help of Shopify
• Jack Dorsey's plan to reshape Square
• Spotify's new agency to connect brands with artists
• ShipBob's integration with Amazon Shipping
• Walmart's new app store to compete with Google Play
• Google hitting pause in AI images
• Overstock.com regretting its actions

All this and more in this week's 162nd Edition of Shopifreaks. Thanks for subscribing and sharing!

Stat of the Week

Walmart hit $100B in online sales for the first time last year, representing a 23% increase YoY. Amazon still has a considerable lead with $255.9B in sales last year, but Walmart is slowly closing the gap.

1. Walmart had an amazing year in 2023

As you read above in the stat of the week, Walmart surpassed $100B in online sales last year for the first time. It's been exciting to watch them move towards catching up to Amazon in a big way during the past several years — from increasing the number of 3rd party merchants on their marketplace to revamping their website and adding text to shop and other features. 

Here are some e-commerce highlights from last week's 4th quarter earnings call: 

• Walmart is still not making money from e-commerce, but it's getting close. They've lowered e-commerce losses by more than 40% compared to last year’s level.
• It plans for online sales to become profitable with the help of its ancillary businesses like its advertising and fulfillment services to brands that sell on its marketplace.
• In the U.S., approximately 30% of Walmart’s Marketplace sellers currently use Walmart Fulfillment Services.
• Walmart Connect, its advertising business, grew 30% last year, which it hopes to beef up even more with the acquisition of Vizio's TV division, including its SmartCast, the operating system that powers Vizio's connected TVs.
• The company has also has improved e-commerce profitability in the US by lowering fulfillment costs and densifying its last mile operations.
• Store-fulfilled delivery sales were up nearly 50%.
• Walmart is on track towards having 55% of its fulfillment center volume and 65% of its supercenters serviced by automation by the end of 2026.
• Walmart operates 37 drone delivery hubs across seven states and has completed 200,000 deliveries during the last two years.
• CEO Doug McMillon said, “We’re in execution mode… underneath the supply chain is changing to be more intelligent, more connected, more automated, and that’s just going to help us improve execution.”

Last week I reported (story #3) that Walmart was in talks to acquire Vizio's TV division, and on Tuesday, they announced it officially during the earnings call.

2. Shein launched its new collections via livestream

Shein launched its spring and summer collection yesterday via a livestream, working with celebrity influencers to attract attention to its shoppable livestream show “Shein Live: Front Row.” This is the second time they've leveraged livestream to launch new collections. Last September, Shein showcased apparel from its fall-winter collection during a shoppable livestream event as well.

George Chiao, President of Shein US, said, “Building on the success of last fall’s Shein Live: Front Row event, we are thrilled to unveil the next chapter in our innovative virtual fashion experiences. The Spring/Summer showcase continues as an interactive celebration of style that instantly connects our vibrant community to the latest Shein collections.”

The event was hosted by Shein host Renee Ariel and enlisted actress Teala Dunn, podcast host Jenicka Lopez, and influencers Azra Mian and Aisha Mian.

Shoppers were able to view the three-hour livestream on YouTube, X, Instagram, and Facebook, as well as on Shein's app. Noticeably TikTok was not included on that list of channels, which could be because their livestream software doesn't yet integrate with TikTok, as I've recently learned that TikTok doesn't make it easy for 3rd party streaming platforms to connect.

The event was part of Shein's goal to seize a greater share of consumers' retail spending by capturing more of their digital attention. The company already holds roughly 18% market share of fast fashion, but hopes to grow that number even larger.

🔥 Partner News

OpenStore brought on Rebecca Traverzo as its Head of Marketing, who brings over a decade of experience scaling brands and managing creative for some of the biggest fashion and DTC brands. Traverzo's work history includes prior executive roles at Casper, Calvin Klein, and ThirdLove. Her role will involve leading the strategic vision, customer acquisition, retention, and channel execution for nearly 50 of OpenStore’s DTC brands.

3. Google can now train its AI with your Reddit data

Google and Reddit negotiated a $60M content licensing deal to allow Reddit's data to be used to train their AI models, and they announced it in the weirdest way possible.

Google wrote, “Reddit plays a unique role on the open internet as a large platform with an incredible breadth of authentic, human conversations and experiences, and we’re excited to partner to make it even easier for people to benefit from that useful information.”

LOL — human conversations? Did Gemini write that announcement?

Here's what the new expanded partnership will entail: 

• Reddit will integrate Google's Vertex AI to enhance its search capabilities on the platform. This is great because Reddit search has historically been pretty terrible. Most Redditors, myself included, use Google to search posts by simply adding “Reddit” to the end of our search queries.
• In turn, Google will make it easier to access Reddit posts across their products, most likely through AI generated responses.
• To facilitate the above, Google now has access to Reddit's Data API, which delivers real-time content from their platform.

And that my friends, is why Reddit pissed off their entire user base last year by eliminating free or affordable access to their API, which was used by apps like Reddit is Fun and Apollo and other software that added value to the Reddit experience. (See story #2 in Edition 124 for more details about that.)  It was all in preparation for content licensing deals like this one with Google, in anticipation of their IPO next month.

So does this mean that everything I write on Reddit is now property of Google?

Publishers like myself have historically leveraged Reddit's high page rank and large user base to create posts that drive traffic to our websites. That's not the only reason I use Reddit — I enjoy it personally too — however a portion of my engagement on the platform is for professional purposes.

For example, with this newsletter, I've got my own subreddit called r/shopifreaks where I post news stories throughout the week, as well as my full editions each Monday. I'm also active on r/ecommerce and r/ShopifyeCommerce where I post summary recaps of each edition (which is how many of you found this newsletter). 

With this new deal with Reddit, are we effectively competing against ourselves on Google by continuing to post on Reddit? In other words, is the content I share on Reddit that is written to bring attention to my newsletter ultimately going to become Google's content? So if someone searches “e-commerce news” on Google, are they going to take last week's e-commerce recap on r/ecommerce and spit out my carefully crafted curation as their own AI generated response?

The answers to my questions above will soon be revealed, as will whether this deal with Google, Reddit's upcoming IPO, and the other recent moves to enshittify Reddit will be the final straws ruin the platform.

What are your thoughts on this content licensing deal between Reddit and Google? Hit reply and let me know. 

4. Amazon launches a new Indian marketplace

Amazon is working on a new e-commerce marketplace to reach Indian shoppers called Bazaar, which it hopes will help the company further compete against Walmart-owned Flipkart, Reliance-owned Ajio, and SoftBank-backed Meesho.

Bazaar will only feature unbranded fashion and lifestyle products that are priced below 600 Indian rupees ($7.20 USD), and Amazon will take no referral fee on sales. They will instead solely earn through their advertising and fulfillment services. Amazon has already begun onboarding sellers and is asking them to list unbranded products like apparel, watches, shoes, jewelry, and luggage. 

The unbranded fashion segment has already been successfully tapped by Meesho and Flipkart, and Reliance is currently working on a low-price platform called Ajio Street. However unlike Flipkart, where low-priced unbranded products are offered through a separate app called Shopsy, products on Bazaar will also be featured on Amazon's marketplace. And unlike Meesho, Amazon owns its warehouses and delivery system.

The delivery times on Bazaar will most likely be 2-3 days on average, deviating from Amazon's fast delivery proposition offered to Prime members in the country. However who needs an unbranded watch the same-day?

Bazaar is one of the key new initiatives from Amazon in the country, which has previously deployed over $7B in India and committed to investing another $2.3B in its e-commerce operations by 2030. Last week Amazon also announced that it would be starting delivery service in Gajoli, a remote village in Uttarkashi district of Uttarakhand, which Amazon say makes it the first and only e-commerce company to deliver packages to Maharishi Ashram at Gajoli, situated 4,500 feet in the Himalayan mountain range.

5. Wix taps into Shopify's ecosystem for cross-border sales

Okay, well technically Wix is partnering up with Global-e to help merchants sell internationally. However, Shopify acquired a 6.5% stake in Global-e back in 2021, which it increased to 10.20% in 2022, and most recently to 12.8% — so that makes it part of Shopify's ecosystem, right? Same as if Wix tapped into Flexport's fulfillment network or Klaviyo's e-mail and SMS services? 

This is one thing I find very attractive about SHOP stock (which I admittedly own too much of in proportion to the rest of my portfolio). Due to Shopify's large investments in other e-commerce platforms and SaaS products, which are used by competing platforms, Shopify is positioned to grow in value with the industry as a whole, regardless of whether merchants utilize Shopify as its sales platform. This partnership between Wix and Global-e is a perfect example. 12.8% of all revenue flowing from Wix merchants to Global-e eventually makes its way to Shopify's bottomline. 

Anyway, back to the Wix / Global-e deal….

The partnership will enable Wix merchants to:

• Price and sell in more than 100 supported currencies
• Create customized local welcome messages and checkout flows
• Adhere to local tax and duty requirements
• Offer flexible pricing by country
• Enable international payment processing with fraud-prevention support
• Offer additional options for shipping, local and pre-paid returns, and customer service
• Access analytics and data for local insights

Wix had more than 263M registered users at the end of 2023, up 8% from a year earlier, of which nearly 683k Wix sites operate as stores e-commerce stores. So this is a huge new market to tap into for Global-e. 

6. Jack Dorsey's plan to reshape Square

After retaking day-to-day control of Square last fall, Jack Dorsey is planning to overhaul the 15-year-old app so that it works more cleanly with Block's other products.

His goal is to make Cash App one of the top providers of banking services to US households earning up to $150k annually by beefing up financial tools and making the P2P app the go-to banking source for Square sellers.

Dorsey told analysts during a conference call last week, “We're going to start putting our Square customers first and foremost in the Cash App, and you'll really see the power of our combined ecosystems and a combined network,” noting that Cash App P2P features position the app to operate as a “social bank.” (That sounds a lot like Elon Musk's plans for X.)

A top priority this year will be tightening the integrations across Square, Cash App, and Afterpay, while eliminating up to five versions of the Square app that previously targeted different user groups and instead creating a single app called Square, with tabs for users to access various services. (I actually never knew that Square operated with multiple apps. Whose brilliant idea was that?)

Block also plans to promote Afterpay within Cash App by displaying BNPL offers there, and by inviting Afterpay users to pay for BNPL purchases with the Cash App Card.

About the same time this conference call was taking place and Dorsey spoke to investors about the future of the company, Block cut another 112 jobs, as part of its ongoing efforts to reduce its workforce from over 13,000 to 12,000 by the end of 2024.

7. Spotify launches a service to connect brands and creators

Spotify is following in the footsteps of Meta, Snap, YouTube, and TikTok by launching a new program to connect creators with brands.

AUX, its new in-house “music advisory agency” for brands, will facilitate connections between brands and emerging artists for campaigns benefiting both parties.

Does that mean I can sponsor Camila Cabello to write a song about Shopifreaks? “E-commerce, commerce, commerce. Half of my heart is in e-commerce, commerce, commerce.”

Coca-Cola is AUX's first client, which will team up with Peggy Gou, a South Korean DJ and songwriter, for a long-term partnership that will include live concerts, events, social media content, a branded playlist, and on-platform promotional support.

Spotify wrote in a blog post, “Spotify AUX will broaden the opportunities available to artists, offering them a platform for creative expression, financial support, and strategic partnerships that go beyond traditional industry avenues.”

Jeremy Erlich, VP, head of Music Content at Spotify, added, “AUX is a natural step for us to help brands strengthen their music strategy and better connect with new audiences through our expert insights and observations from our music team, tailored to meet brands’ needs.”

Pro: It's already a known fact that many artists make most of their income from live concerts, merch, and sponsorship deals as opposed to royalties from radio play, album sales, and platform streams. AUX could help bring more of those income-producing opportunities to musicians.

Con: It might take pressure away from Spotify to pay musicians more for their music streams, since now the company can justify that it's providing new revenue opportunities for artists, which will likely cater to the top producing artists on the platform.

8. ShipBob rolls out Amazon Shipping as a delivery option

ShipBob is now offering Amazon Shipping as a new delivery option for eligible US orders, according to its Winter '24 Release. It will now appear as a shipping option next to FedEx, UPS, USPS, DHL, and ShipBob's other fulfillment partners.

Amazon Shipping is the company's shipping service for external deliveries that competes directly with FedEx and UPS. The service launched in 2018, but was paused in early 2020 at the start of the pandemic because Amazon was flooded with its own orders that it could barely keep up with during lockdown.

However in August 2023, Amazon relaunched Amazon Shipping in the U.S. for both packages sold on Amazon's website and items from other marketplaces and selling channels. (Which means you can sell an item on Walmart.com and have it delivered in an Amazon truck!)

Brittany Barron, Head of Product Marketing, said that ShipBob is the “only fulfillment solution to offer this” with Amazon Shipping, which she called “the fastest growing carrier in the US.”

However I'd imagine that this integration with ShipBob will be the first of many for Amazon Shipping as it slowly expands the service.

9. Other e-commerce news of interest

62 million tons of paper and cardboard waste in the US ends up in landfills, which accounts for around 56% of the 110 million tons manufactured each year, according to a study from the US Department of Energy. The estimated market value of paper and cardboard lost to landfilling in 2019 was $4B.

Walmart's PhonePe launched an India mobile app store called “Indus Appstore” to challenge the dominance of Google's Play Store in the country. Indus Appstore features over 200k apps including Flipkart, Spotify, and Paytm, supports third-party payments and will not levy any listing fees for one year

Google stopped allowing users to generate images of humans with its Gemini AI tool last week after people complained that it produced pictures of Black founding fathers, a female pope, and gay couples when you asked it to create images of straight couples. Google aims to avoid bias in the output of its AI tools, but attempting to remove stereotypes has caused them to “miss the mark,” according to Google.

In other AI news at Google, the company introduced Gemma, a family of lightweight open AI models built from the same research and technology used to create Gemini, to compete with Meta's Llama 2 and other open source large language models. While Gemini is a closed AI model that directly competes with OpenAI’s ChatGPT, the lightweight Gemma will be suitable for smaller tasks like simple chatbots or summarizations.

Cart.com began offering its order management software solution as a standalone product. The Constellation Order Management System allows merchants to unify orders and inventory across multiple channels and was previously only available as part of Cart.com's unified commerce and logistics solution, but is now available to merchants on all e-commerce platforms.

DoorDash agreed to pay $375k to settle claims that it broke California's privacy laws by giving away customers' info without their consent and without giving them the opportunity to opt-out. The company also agreed to review its technology and contracts with marketing and analytics vendors to confirm it's sharing or selling information legally.

BigCommerce launched a new video series called B2B Bites, which will offer a curated collection of videos featuring wisdom from B2B industry leaders. The new series will feature expert interviews, how-to guides, trend analysis, and success stories with topics ranging from how to prepare your business for an exit to how to optimize your site for SEO.

Zilch, the UK-based BNPL firm, launched a new credit payment product called “Pay Over 3 Months,” which is designed for larger purchases such as buying electronics, car tires, or home repairs. The new offering has already been tested by over 100k customers, and the company plans to roll it out to 3.6M users in April.

AfterShip enabled Apple Wallet Order Tracking, which allows users to receive delivery updates in real time through their Apple Wallets. Customers can activate the new feature by clicking the Track with Apple Wallet button on a merchant's order confirmation page or within e-mail and SMS order confirmations.

Walmart and Amazon are facing legal trouble over the points-based attendance systems (which are kinda like Shrute Bucks) they use to track worker absences, which resulted in the firing of multiple employees. In the lawsuit, fired workers accuse the companies of violating their employment rights by terminating them after they took legally protected time for sick, medical, or pregnancy-related leave.

Zomato, the Indian restaurant aggregator and food delivery company, is planning to expand its 10-minute delivery platform, Blinkit, by adding products from various categories, which would put the company in direct competition with Amazon and Flipkart. The company plans to build its supply chain to directly source products and manage stock and is already in talks with individual brand owners to stock up on inventory.

Meta expanded its Instagram Creator Marketplace tool to eight new markets including Canada, Australia, New Zealand, UK, Japan, India, Brazil, and Chinese export brands. The Creator Marketplace initially launched in 2022 as a means to help connect US-based brands with Instagram influencers for in-app partnership opportunities, and now advertisers will gain access to a wider variety of creators who can help expand their target audiences.

Google confirmed a bug with using negative search operators within Google Shopping, which is a way to exclude words from your search results. Google is aware of the issue and working on a fix, but as of now, it's not resolved.

Credit card debt in the US is now at record levels, reaching over $1.13 trillion, and interest rates on those cards have soared. This number does not include the growing debt of BNPL platforms, since these loans are often not reported to credit agencies.

Indonesia issued regulation requiring digital platforms like Meta and Google to pay media outlets that provide them with content, which the country says is part of its efforts to ensure media companies “are not eroded” by digital platforms. A committee will be formed to ensure digital platforms fulfill their responsibilities to the media companies. Google said it will review the regulation, and Facebook did not respond to comment.

Amazon is now offering new gifts bags with handles in the US and EU, which are made from 100% recycled material and can be reused for future uses. The new bags still have the dual drawstrings, and you can stuff the handles down inside the bag, since they are attached from the inside, if you prefer the classic gift bag look.

Klarna is launching a digital verification service called “Sign in with Klarna” that is designed to speed up consumer login to e-commerce sites and apps in 23 countries including the US. On registration, the customer chooses what data they'd like to share with the store and if they want to join their membership or loyalty programs.

Chinese livestreaming agencies promised rising influencers fame and money, but ended up trapping them in multi-year contracts without giving the influencers the support they promised. Legal disputes are now on the rise as livestreamers attempt to leave their contracts, resulting in the agencies demanding money.

The US Department of Commerce announced the designation of 31 Tech Hubs in regions across the country, as part of the first phase of its new economic development initiative designed to drive regional innovation and job creation. The program invests directly in burgeoning, high-potential US regions and aims to transform them into globally competitive innovation centers.

TikTok is launching a “Star Creator” team to focus on finding and developing influencers who can drive sales to TikTok Shop. According to its job portal, the company is hiring for several new roles in the US and UK including a “star creator manager” and a team lead focused on Shop creators who are good at selling fashion items.

UPS is cutting sorting shifts in New York, Rhode Island, and Virginia, as the delivery company continues to adjust to volume declines. The company did not say exactly how many employees would be let go, but stressed that the layoffs help them deliver “industry-leading service” and maintain “competitive prices.”

Overstock.com is planning to relaunch its store on Shopify in about five weeks, which it shut down last year after acquiring Bed Bath & Beyond's intellectual property in a bankruptcy auction for $20M in favor of operating on its business on BedBathandBeyond.com instead. Marcus Lemonis, executive chairman of the board, said that in hindsight, shutting down their website was a “fatal mistake.”

10. Seed rounds, IPOs, & acquisitions

Walmart plans to buy Vizio for $2.3B to access the TV maker's SmartCast operating system, which will enable Walmart to accelerate Walmart Connect, its retail media network. Last week I reported (story #3) that Walmart was in talks to do so, and on Tuesday, they announced it officially. 

Techtaka, a South Korean e-commerce fulfillment startup, raised $9.5M in a Series B round from sole investor Altos Ventures, bringing its total amount raised to $18M. The company will use the funds to advance its technology, scale its service for online merchants, and hire staff.

Carewell, an e-commerce platform for caregiving products, raised $24.7M in a Series B round led by MBF Healthcare. The funds will be used to drive the company's goal of streamlining access to home health products.

Jamie Dimon, the CEO of JP Morgan Chase, and his family sold $150M worth of the bank's stock, following through on last year's announcement that he would begin selling shares for the first time since taking the helm 18 years ago. When he took over as CEO, the stock was trading for about $40, and he sold 822k shares for around $183 each.

JD.com is considering an offer to buy Currys, a UK-based electronic goods retailer that has 823 stores across Europe and employs 28,000 workers, as a means of diversifying its mostly-China based portfolio of businesses. Curry recently rejected an offer from Elliott Advisors for £700M, so although JD.com hasn't revealed its offer price, you can bet it's bigger than £700M.

AddGlow, a community platform that enables brands to increase retention and drive more organic traffic by hosting online communities on their own domains, raised $1.7M in a pre-seed round co-led by Stellation Capital and Precursor Ventures. The company is still very much in its early stages following a year of product development, and the funds will be used to bring on engineers and designers. 

NTWRK, a livestream shopping platform, is acquiring Complex Networks, a streetwear, music, and sports-centric media company, for an undisclosed amount, with investment from Main Street Advisors, Universal Music Group, Goldman Sachs and Interscope Records founder Jimmy Lovine. The deal will create a new entity that the two companies claim will be a “new destination for superfan culture” and bring an e-commerce marketplace into the former media brand's ecosystem.

Planity, a French startup that operates an appointment booking SaaS product for hair salons, barbers, and nail salons, raised €45M in a Series C round led by InfraVia Capital Partners. There are currently around 200 sales people working for Planity who go and meet new clients face-to-face to teach them how the software works, and the company plans to use the capital to hire even more.

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PAUL

Paul E. Drecksler
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